Understanding outcomes-readiness: What are the structural factors influencing the launch of impact bond projects

Implementing impact bond (IBs) projects has often been described as challenging. More than ten years after the first contract, 283 projects have been launched. Although impact bonds are present across the globe, they are concentrated in specific regions, especially in the Global North.

The factors underpinning the success or failure in launching an impact bond have not yet been fully explored and tested. This report aims to shed light on the factors influencing the probability of whether an impact bond is successfully launched. Building on previous qualitative frameworks developed by practitioners, evaluators and commissioners, our original contribution is to use quantitative data to test which are the factors that influence the probability of launching an impact bond project.

Our analysis shows that:

1. Data availability plays a key role in increasing the chances of launching impact bond projects.
2. Having experience with a previous impact bond (IB) significantly increases the probability of a country launching additional projects.
3. The interaction between previous projects and strong regulatory frameworks has a significant positive effect on the probability of launching additional impact bond projects.
4. The interaction between previous projects and state capabilities has a significant positive effect on the probability of launching additional impact bond projects.